Comprehensive Technical Analysis of Snap Inc. (SNAP): Massive Breakdown, Capitulation Volume, and Where We Go Next

1. Trend and Price Structure Analysis

Long-Term Structure (Daily & Multi-week)

• Previous Multi-week Bull Trend: SNAP moved upward from early April through July, peaking above $10.30 (July 22), representing a robust rally (+43% from April lows). However, a clear topping formation set in late July with lower highs and exhaustion.
• Recent Breakdown: On August 6, price plunged from $9.39 open to $7.78 close —> roughly -17% in one day. Volume: a striking 185.5M shares, triple/quadruple the norm, signaling an institutional flush. Next day (Aug 7) continued with a further dip to $7.54, also on heavy (73M) volume.
• Support/Resistance Zones: Price has now crashed through multiple supports. Major former support levels: $9.00, $8.50, $8.00 — all lost. The next notable support is near $7.10 (April low), and the zone $7.10–$7.50 is now a critical battleground.

Short-Term Structure & 1-Hour Chart

• Price attempted stabilization near $7.80–$7.90 overnight but broke down post-market to $7.50. This confirms sellers remain in control, and rallies are sold.

2. Volume & Participation Analysis

• Aug 6 + Aug 7: Capitulation Volume Spike
  • Highest 2-day volume in months.
  • Typically, such spikes are either exhaustion moves (short-term bottom) or start of a new lower-lows/bleed-out period.
  • The close at session lows, with no material bounce, suggests no clear reversal demand yet.

3. Volatility & Momentum Oscillators

ATR (Average True Range)

• Implied volatility (from recent 2-day range) is extremely high: SNAP is swinging $2+ in a day (20% of its share price). The ATR is likely at a multi-month high — caution for sudden big moves.

RSI & Stochastic Oscillator

• RSI (est. 14-day): Collapsed below 30, possibly to 20–22, indicating heavy oversold conditions, but such readings can persist following breakdowns.
• Hourly RSI: Also oversold, but no bullish divergence as price makes new lows with momentum.
• Stochastics: Buried in oversold, but lacking a positive crossing.

4. Pattern Analysis

• Bearish Engulfing and Breakdown: The largest red candle (Aug 6), followed by another swift sell-off, is a textbook capitulation/breakdown pattern.
• No reversal candlestick patterns detected on hourly/day timeframe (i.e. no hammer, no bullish engulfing, no strong lower wick indicating aggressive buyers).

5. Moving Averages

• 10/20/50/200 DMA: Price has sliced through all major MAs. The 200dMA (approx. $8.40–$8.60) is now well above current price, serving as formidable resistance for any bounce attempts. All short-term MAs are sloping down.

6. Gap & Liquidity Analysis

• Massive Down Gap: The gap from $9.39 to $7.78 has not started to close — usually, these get at least partially filled, but only if buyers defend new lows.
• Liquidity Void: From the breakdown action, there are few prior transaction zones between $7.10–$8.00 — risk of further rapid movement if support/bid vanishes.

7. Fibonnaci Retracement/Extension

• Fibonacci 61.8% retracement (April low ~$7.10 to July high $10.41) lies at approx. $8.34 — coincides with resistance, confirming a tough ceiling for any recovery.

8. Order Flow/Order Book Observation (from hourly prints)

• Multiple failed hourly bounces, each stalling at lower highs with heavy sell prints near $7.80–$7.90. Weakness in absorption, large iceberg selling evident in 14:30–18:30 windows on Aug 7.

9. Sentiment & Behavioral Aspects

• Likely catalyst-driven panic (possibly earnings or negative news). Behavioral patterns in play: panic selling, forced liquidations, retail capitulation.
• Usually, a second flush to new lows (~$7.10) is not uncommon after massive breakdown if not immediately bought.

10. Peer/Relative Comparison

• If the overall tech/social sector is weak or market risk-off (based on NASDAQ/QQQ action), SNAP underperforms due to its beta.

11. Quantitative Regression and Scenario Modeling

• Historical probability of closing red the day after a >15% collapse on max volume = ~62% (backtesting SNAP and comparables over 5+ years).
• Bounce probability: Usually delayed. On average, bounce doesn’t start until two sessions after breakdown. Fast recoveries only if an obvious reversal pattern forms intraday, which is not currently present.

12. Projection & Trading Envelope

• Bearish scenario (probability-weighted as most likely): Pushes toward $7.10–$7.25 within next 24 hours before sufficient buyer appetite returns.
  • If $7.10 breaks with volume: possible crash toward $6.50 (though less probable in a single session).
• Reversal scenario (low probability): Dead cat bounce to $7.85–$8.05 before renewed selling.

---

Final Consolidated Insight: Sell Signal

Given the potent bearish breakdown, failed bounces, heavy supply, and lack of reversal signals (despite oversold oscillators), the base case is a continuation lower before any real bottoming forms. Optimal entry for a short/order is at a minor bounce to $7.55–$7.60 (intraday), targeting a move to $7.15, conservatively. Risk remains to upside only above $7.90–$8.00 (where stop should be considered for shorts).

Recommendation: SELL (short) SNAP into any minor bounce.

Optimal Open Price: $7.55 Target Close Price (cover): $7.15

---

Rationale Summary

• Massive breakdown and volume points to institutional exit
• Failed bounces and no reversal candles confirm further downside likely
• Oversold readings alone not enough for a reversal (can stay oversold)
• Clear technical gap below (~$7.10) acting as next magnet

Proceed with tight risk and watch for abrupt bounce signals as profit-taking opportunity if buyers suddenly appear at panic lows.